\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 27 Sino Wealth Electronic Ltd(300327) )
Event: in 2021, the company achieved an operating revenue of 1.494 billion yuan, a year-on-year increase of 47.58%, a net profit attributable to the parent company of 371 million yuan, a year-on-year increase of 77.00%, and a net profit not attributable to the parent company of 361 million yuan, a year-on-year increase of 88.39%.
The company is expected to realize a net profit attributable to the parent company of 101112 million yuan in the first quarter of 2022, with a year-on-year increase of 50% – 65%
MCU: the industry is booming, the foreign strategy is adjusted, the localization process in some fields is accelerated, and the company clearly benefits. Looking back on 2021, driven by the rapid growth of the new energy vehicle market, the global demand for MCU chips clearly increased, while on the supply side, the supply contracted due to many emergencies such as the Reza fire. In this case, foreign first-line MCU suppliers adjusted their market strategies and focused their resources more on relatively high-level market applications such as vehicle mounted, This has accelerated the domestic substitution process of China’s white power MCU application market to a certain extent. Relying on the advantages of high cost performance, high stability and low defect rate, the company has become one of the main options for domestic substitution of MCU. During the reporting period, it has achieved a mass production breakthrough in the field of variable frequency power supply. Since this year, the product prices of foreign MCU core suppliers such as Italian French semiconductor, NXP and Infineon are expected to rise, It shows that the prosperity of global MCU is still maintained at a good level, and the company’s share in white power MCU market is expected to be further improved. Of course, in the case of continuous shortage of wafer production capacity, the company is also taking a variety of effective measures to ensure production capacity supply, such as OEM of self purchased testing machines, switching the product process from 8 inches to 12 inches, long-term and stable cooperation with wafer suppliers, etc.
Lithium battery management chip: from consumption to power, the market increment is considerable. At present, the company’s lithium battery management chip products have achieved mass production by many mainstream brand manufacturers in the field of mobile phones and TWS headphones, successfully breaking through the front installation link, and the notebook computer field has begun to be recognized and adopted. The application scenarios of lithium battery management chips include most consumer electronic products, and the original replacement space is enough for domestic manufacturers. In recent two years, the continuous popularization of fast charging function of consumer electronics has further improved the market space of lithium battery management chips. In addition, lithium battery management chips are more and more widely used in power terminals such as electric bicycles and energy storage, It has brought considerable incremental elasticity to the overall market. For the company, with the continuous strengthening of the voice of domestic brands, the company is expected to continue to improve the market share of lithium battery management chips in the fields of consumer electronics, laptop and power.
AMOLED driver chip: steady growth, relying on downstream customers to achieve domestic substitution. In the past two years, AMOLED screen is gradually becoming the mainstream screen scheme of mobile phones, and domestic AMOLED panel factories are also entering the mass production stage. However, the relevant driver chip market is still dominated by Korean and Taiwan manufacturers. The company takes domestic mobile phone brand manufacturers and screen factories as its target customers, and continuously realizes the introduction of new technologies and products. In the future, it is expected to benefit from the continuous growth of relevant markets in China and realize the continuous expansion of sales and profit scale.
Profit forecast and investment rating: raise the buy rating. All business segments and product lines of the company are on the growth track. The traditional product MCU is growing steadily. The breakthrough of lithium battery management chip, AMOLED driver chip and WiFi chip is bringing considerable performance incremental elasticity to the company. It is expected that the company will realize net profits of 506 million, 663 million and 870 million respectively from 2022 to 2024. The current stock price corresponds to PE 34.34, 26.23 and 20.00 times, and the company’s rating will be raised to buy.
Risk tips: (1) the decline of MCU prosperity slows down the trend of domestic substitution; (2) The import progress and order volume of lithium battery management chip customers are less than expected; (3) The slow rate of yield climb of AMOLED production line in China leads to the delay in the starting progress of display driver chip.
